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News Analysis 6 Jul 2020 - 3 min read

Publicis Australia enters stage four of pandemic response, 30 jobs gone as Forrester predicts agencies to cut 100,000 jobs globally through 2021

By Josh McDonnell - Senior Writer

Publicis Groupe ANZ is entering stage four of its COVID-19 response strategy, with more than 30 roles made redundant and restructuring to take place. Other holding groups such as IPG Mediabrands are keeping its nine-day fortnight and 10% paycut measures in place, as Forrester Research predicts global agency job losses upwards of 100,000.

What you need to know:
  • Publicis has entered the next stage of its COVID-19 response strategy
  • The move to stage four will see more than 30 roles made redundant
  • The roles impacted are in areas of the group handling severely affected sectors, such as travel
  • Pay freezes and voluntary cuts are also being utilised to stem any further revenue declines
  • IPG Mediabrands also confirmed it was continuing its 10% pay cut and nine-day fortnight
  • The news follows research from Forrester that claimed agency job losses could reach 50,000 globally and 52,000 to be lost in the US alone in 2020
  • Agencies will also see two years of negative growth - including a decline of 30% for 2020 and 20% for 2021, according to Forrester


Job losses continue, Forrester predicts mayhem

Publicis Groupe in ANZ the region has moved to stage four in its pandemic response.

The move included 34 redundancies with resizing and restructuring underway.

The has been no major team or agency specifically hit. Mi3 understands it is primarily isolated to the areas of the business with high exposure to big brands in stress.

Stage four will remain an ongoing process, with voluntary salary reductions, leave use and pay rise freezes still in effect.

Publicis confirmed the news to Mi3.

“Throughout the COVID-19 pandemic putting our people first has been our guiding philosophy; ensuring their safety and well-being, and protecting as many jobs as possible so that our team is in the best shape possible to help our clients through their recovery,” said Michael Rebelo, CEO of Publicis Groupe ANZ.

Publicis says since the middle of March, the group has "taken every step" to ensuring that it "exhausted all cost-containment measures" before considering making redundancies.

This has consisted of three stages:

  1. Holding expenses and variable costs as strictly as possible;
  2. Staff taking annual leave;
  3. Voluntary salary reduction of Groupe leadership, agency CEOs, MDs, leadership teams and senior staff. Rebelo says the strategy has been to ensure employees at entry and mid-level have been protected.

"At every stage of our plan, we have taken a collaborative and united approach with our agency CEOs and leadership team," the company said in a statement ot Mi3. "We have also been very transparent and regularly shared with our entire team our plan to manage through the pandemic, and our progress."

As a result, the holding company estimates that its Groupe-wide efforts have helped save around 80 jobs that otherwise would have been affected by the impact of COVID-19. 

Publicis confirmed that 34 roles were at risk of redundancy in a small number of its agencies, out of the more than 1,570 people that work across Australia and New Zealand. It said it represented less than 2% of its workforce. For some of those affected, the group has been able to successfully redeploy them to other agencies and continues to look for other transfer opportunities.

To help provide assistance to people as they search for new employment, Publicis Groupe’s Talent Acquisition team has put together a Redundancy Support Program.

This includes information on immediate support such as financial and money management, exploring new career pathways, and mental health support services; consultations with a Talent Acquisition team member for advice on where to look for new opportunities, access to industry talent acquisition contacts and preparing for job interviews; and access to online growth learning and development training modules.

The news follows a recent report by research and analytics firm Forrester, forecasting advertising agencies will be forced to shed more than 52,000  jobs go in global markets from now until 2021 as a result of the pandemic. Seperately, Forrester predicts the US would see 35,000 jobs go this year and another 16,700 in 2021. Forrester predicts two years of negative agency growth, with a decline of 30% for 2020 and 20% for 2021 

Commenting on the Forrester report, IPG Mediabrands ANZ CEO Mark Coad told Mi3  that it "certainly outlines a very tough forecast".

"The Australian economy is forecast at -10% for the first half of 2020, then around 3-4% for the full year (GDP)," Coad says.

"That’s on the light end of the global scale – so we’d sincerely hope the impact on our industry is not of the magnitude Forrester is predicting elsewhere.”

Mediabrands continues to mirror many of the other global holding groups, confirming to Mi3  that the current 10% pay cut and nine-day fortnight measures were still in place.

These were implemented earlier in the year. Global IPG boss Michael Roth stated in late April paycuts could reach up to 25%, labelling continued job losses as "unavoidable".

Forester Analyst and Report Author Jay Pattisall told Forbes agency employment levels may not return to prior levels even as the effects of the pandemic dissipate.

He says the overall jobs decline of 13.% could require CMOs to explore alternative methods of compensatation for agency partners, based not just on billable hours but tech fees as well.

“Imagine being a CMO and you’re seeing the (agency) team is not what is what was because of what we’re living through,” Pattisall says. “And what we will live through over the next year-plus, it’s a bit of a threat for the company to come back and meet the pent-up demand of consumers when Covid starts to abate.”

Pattisal also says agency media and creative operations are still not as integrated as they should be, reiterating the on-going argument that digital marketing has taken a "bolt-on" feel for hodling groups and remains "woefully out of date".

“This set of circumstances is unprecedented. The contraction of spending is across the board, and agencies as a service provider take the biggest hit," he says.

“Ultimately, it will be less specialisation and more of a multiskilled workforce that includes new systems and tools."

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Josh McDonnell

Senior Writer

Market Voice

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